ICICI Direct's research report on Bajaj Auto
Bajaj Auto (BAL) reported healthy Q1FY21 results. Net revenues came in at Rs 3,079 crore (down 60.3% YoY) tracking higher-than-expected blended ASPs, which were at Rs 69,493/unit (up 6.9% YoY). Total volumes were down 64.5% YoY to 4.4 lakh units (2-W volumes 4.0 lakh units, down 63% YoY; 3-W volumes 43,174 units, down 73.8% YoY). Total exports were at 2.5 lakh units, down 54% YoY. Reported EBITDA margins came in at 13.3% (down 511 bps QoQ) amid gross margin expansion of 130 bps (including impact of forex gains). Consequent reported PAT was down 53.1% YoY at Rs 528 crore. At the consolidated level, share of loss from KTM amounted to Rs 132 crore.
Outlook
We value BAL at a revised target price of Rs 3,210 using SOTP method (valuing core business at 18x FY22E EPS and assigning 2x P/B on KTM investment). We continue to assign HOLD rating to the stock. We derive comfort from debt free, cash rich B/S, capital efficient business model and robust cash flow generation.
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